Jan 2, 2009

Tech - Chinese software pirates get prison sentences

SAN FRANCISCO - The alleged ringleaders of a Chinese counterfeiting gang that sold at least $2 billion worth of bogus Microsoft Corp. software were sentenced Wednesday to prison terms of up to 6 1/2 years, in what is believed to be the harshest penalties yet under China's tightened piracy laws.

The punishments meted out against the 11 defendants, and announced by Microsoft Corp., could help China improve its image as a country that doesn't crack down hard enough on copyright violators, though the technology and entertainment industries still say China has a long way to go. The sentences ranged from 1 1/2 to 6 1/2 years, according to Redmond, Wash.-based Microsoft.

The fact that Microsoft, and not the Chinese courts, disclosed the sentences is not unusual. Lawyers are the only source of information in many cases in China because rulings often are not publicly announced. Court officials usually refuse to disclose details to reporters.

Microsoft calls the counterfeit software operation — which was headquartered in the southern Chinese province of Guangdong and busted by Chinese authorities with FBI help in 2007 — the world's biggest phony-software syndicate.

The counterfeit software was found in 36 countries and 11 different languages. It was so sophisticated that it contained legitimate computer code written by Microsoft for programs such as Windows XP and Vista and Microsoft Office, but also had touches of the criminals' own coding as well. That was allegedly added to mimic security programs and fool users into believing the product was authentic.

Microsoft contends that much of the bogus software was detected by its Windows Genuine Advantage program, which is automatically installed on users' machines. It scans computers for pirated software and alerts people if it believes their products aren't properly licensed. The counterfeits were also discovered through customs seizures, test purchases by Microsoft, and resellers who alerted authorities to suspicious competitors.

"There were a number of things that made this case unique and striking, and among them are the fact that customers provided information, the reach of the syndicate was so international, and that Chinese law enforcement partnered so well with American law enforcement," David Finn, Microsoft's associate general counsel for worldwide anti-piracy and anti-counterfeiting, said in an interview.

Software piracy is still rampant despite individual countries' attempts at cracking down. Research commissioned by the Business Software Alliance, an industry trade group, found that 82 percent of the software used in China in 2007 was not legitimately purchased, more than double the worldwide piracy rate of 38 percent.

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AP Business Writer Joe McDonald contributed to this story from Beijing.